Meet The General Who Positioned Israel To Win In $175 Billion Cybersecurity Market

When it comes to cybersecurity, Israel sits at the center of the world. Israeli companies exported $6.5 billion a year worth of cyberproducts, about 10% of the world market, based on data from Israel’s National Cyber Bureau.

That's up from only a 1-2% share of the much smaller market five years ago. The cybersecurity business in the United States is obviously bigger, but per capita, Israeli companies' presence in this market -- one of the fastest-growing opportunities of the 21st century -- is huge.

In short, the Startup Nation has a sub-specialty. How did it get one? It turns out to be a top-down initiative, straight from
Prime Minister Benjamin Netanyahu. Last week, I interviewed Isaac ben Israel, who's called the father of Israel's cybersecurity business. He recently wrote an academic-style book on the topic called Cybersecurity in Israel.

It was a fascinating conversation in ben Israel's small office, decorated with posters of Albert Einstein (ben Israel has a degree in physics). I walked away thinking about how entrepreneurs and their supporters ought to look at a world in which technology is the biggest friend and greatest vulnerability.

By happenstance, almost, ben Israel, turned out to be an entrepreneurial ecosystem builder. He is a retired Israeli Defense Force major general and a long-time figure in the company's military research and development world. He is now, among other titles, director of the Blavatnik Interdisciplinary Cyber Research Center at Tel Aviv University. In 2002, he said, Ehud Barak called Isaacson to ask him to develop cyber protection for the country's infrastructure. In 2010, Benjamin Netanyahu asked him to launch the National Cyber Initiative. (This article in the New York Times has a good discussion of how much cyber warfare is part of nations' military strategies now -- but my interview with ben Israel focused on the industry that is growing up around commercial and military cyber risks.)

Isaac ben Israel Credit: International Cybersecurity Conference

There's a lot that's different about the military world and the world of entrepreneurship, but in both of them, you base your actions partly on your own goals and partly on the ever-shifting landscape around you. Israel's military, specifically the unit called 8200, is credited with creating the mindset and research that fuel its startup machine.

Ben Israel served in the military from the time he was 19, during the Attrition War that followed the Six-Day War. "When people are shooting at you, it changes you for life," he said. "You learn that you don't stick strictly to what you were told to do."

Here are five lessons I learned from him, and from further research.

If you're a startup, cybersecurity is one of the biggest growth opportunities in decades. I was motivated to look into the topic more, especially in Alec Ross's book The Industries of the Future, which contains a great chapter on cybersecurity. "Over the 20 years from 2000 to 2020, the cybersecurity market will have grown from a $3.3 billion market employing a few thousand people working in IT department to a $175 billion market providing critical infrastructure to just about every kind of business, big and small," writes Ross, a former senior advisor for innovation to the Secretary of State.

Many cybersecurity firms will be software and hardware technology companies, but there will be others, too: from human resources firms skilled at finding the top talent in the field to consultancies who can help executives think through the questions of privacy versus defense, for instance.

Perhaps the most important element of a cybersecurity strategy is that it be adaptable. Ben Israel convened a committee of about 50 people to work with him in 2010. With the mandate from Netanyahu to protect Israel's interests, ben Israel set out to create an ecosystem, one that would keep evolving as the hackers changed their tactics. He recognized that he needed the fluidity of the marketplace.

On a side note, for ecosystem builders: ben Israel paid attention to a long list of elements: culture, education, research universities, the credit system, fiscal policies, law and intellectual property protection, market conditions "and so on," he said. It helped to recruit people to his cause because, even though he was working on an entrepreneurial ecosystem, it was in the national interests.

Entrepreneurs tend to focus on financing when they are building out ecosystems (probably because most entrepreneurs spend their lives trying to keep cash flowing). Ben Israel's approach was broader.

Pay attention to privacy. Ben Israel said that as his committee disbanded, he had to leave fundamental questions about the balance between privacy and security open. "Balance is usually based on experience," he said. "You cannot copy a model when you are inventing a system." The best solution he could come up with, three years later, was to establish the National Cybersecurity Authority, which is currently under construction. It's charged with, ben Israel said, monitoring the telecommunications network. But it won't have direct power to prosecute or go after wrong-doers or security risks. This was ben Israel's idea to create a buffer between citizens' rights and the government -- but he expects the solution will evolve.

On another side note: One of the big challenges of the new era is that, as Lucy Bernholz has noted, the public spaces being monitored by government entities aren't really public spaces: they are owned by private corporations, like Facebook or Twitter. How this will play out legally, in Israel or anywhere, remains to be seen.

The opportunity and the risks are particularly large in the Middle East. One of the reasons Israel focused on this early -- and other Middle Eastern countries are following suit -- is that the risk is higher in the Middle East, possibly because of the high penetration of mobile devices. A report this spring from PwC found that companies in the Middle East were more likely to have suffered losses than companies in other regions: 56% lost more than $500,000 compared to 33% globally, and 13% lost at least three working days, compared to 9%.

Because cybersecurity is so closely aligned with national interests, it's likely that homegrown companies will have advantages within their own territories (that's good news for startups who need to be sheltered from competition as they grow).

At the highest levels, cybersecurity crosses political lines. When Saudi Aramco, the world's most valuable company, was attacked in 2012, it was a trio of cybersecurity firms from Israel, the United States and Russia that detected the attack, according to Ross.

Final lesson

Israel is a unique country -- its military is a much larger part of its economy and, with a three-year compulsory service, the military's effect on the population is much greater. That mindset no question allowed it to develop a cybersecurity industry faster -- but the fundamental lesson is pretty basic. Under ben Isreal's leadership, Israel paid a lot of attention, early, to what is turning into one of the modern era's greatest risks and opportunities.